OpenAI isn't too big to fail. It's bigger.

"The big picture: OpenAI is confronting rising costs, a bruising talent war and uncertainty about its consumer strategy. Altman is refocusing the company on improving ChatGPT and the new models powering it, The Wall Street Journal reports. Between the lines: A technical failure is unlikely, as the company keeps making progress with ChatGPT in the face of competitive challenges. But increasingly complex interlocking deals among a small group of companies, plus the impact of a weakening labor market, are starting to rattle investors. The mere suggestion that some data centers Oracle is building for OpenAI might be delayed was enough to move tech stocks Friday."

"What they're saying: OpenAI's individual role in the greater economy "feels like it should be inconsequential," venture capitalist and MIT research fellow Paul Kedrosky tells Axios. "But I think that's a gross misunderstanding of the nature of what's happening in the market." An OpenAI crisis could trigger a significant disruption, Kedrosky says: "This whole interlocking structure just freezes solid." State of play: If OpenAI falters, "the foundations for the entire [AI] sector become fragile," Daleep Singh, former deputy national security advisor and current head of global macroeconomic research at PGIM, tells Axios. "You have to think about the financial contagion." "There's a multiplier on OpenAI failure that would cascade through the ecosystem," he says. Singh argues that Microsoft and Meta are rushing to buy chips to avoid being left behind. So if OpenAI stumbles, "the FOMO of buying chips vanishes." How it might work: A major reduction in chip orders would have real impacts on the billions in capital expenditures lifting U.S. real GDP growth this year. "Maybe as much as 50% of that grinds to a halt," per Singh. Those Nvidia chips are serving as collateral for billions of dollars of loans. "If the demand for t"

OpenAI confronts rising costs, a bruising talent war, and uncertainty about its consumer strategy while leadership refocuses on improving ChatGPT and underlying models. Technical collapse appears unlikely as ChatGPT continues to make progress, but investor nerves are frayed by complex interlocking deals and a weakening labor market. Suggestions of delays to data centers triggered market moves. Analysts warn that an OpenAI stumble could cascade through the AI ecosystem, reduce chip demand, erase FOMO-driven chip buying, curb billions in capital expenditures that support U.S. GDP growth, and create risks tied to loans backed by Nvidia chips.

Read at Axios